SECURITIES AND EXCHANGE COMMISSION

Investment Company Act Release No. 33927; File No. 812-14987

FS Global Credit Opportunities Fund, et al.

July 15, 2020

AGENCY: Securities and Exchange Commission (“Commission”).

ACTION: Notice.

Notice of application for an order under sections 17(d) and 57(i) of the Investment Company Act of

1940 (the “Act”) and rule 17d-1 under the Act to permit certain joint transactions otherwise

prohibited by sections 17(d) and 57(a)(4) of the Act and rule 17d-1 under the Act.

Summary of Application: Applicants request an order to permit certain business development

companies (“BDCs”)1 and closed-end management investment companies to co-invest in portfolio

companies with each other and with affiliated investment funds and accounts.

Applicants: FS Global Credit Opportunities Fund (the “Fund”); FS Global Advisor, LLC (“FS”);

FS Tactical Opportunities Fund, L.P. (“Existing Affiliated Fund”); and FS Tactical Advisor, LLC

(“Affiliated Fund Advisor”, and together with the Fund, FS and the Existing Affiliated Fund, the

“Applicants”).

Filing Dates: The application was filed on December 17, 2018, and amended on May 20, 2019,

October 1, 2019, January 24, 2020, April 23, 2020 and June 30, 2020.

Hearing or Notification of Hearing: An order granting the requested relief will be issued unless the

Commission orders a hearing. Interested persons may request a hearing by e-mailing the

Commission’s Secretary at Secretarys-Office@sec.gov and serving Applicants with a copy of the

1 Section 2(a)(48) defines a BDC to be any closed-end investment company that operates for the

purpose of making investments in securities described in section 55(a)(1) through 55(a)(3) and makes

available significant managerial assistance with respect to the issuers of such securities.

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request by e-mail. Hearing requests should be received by the Commission by 5:30 p.m. on August

10, 2020 and should be accompanied by proof of service on the Applicants, in the form of an

affidavit or, for lawyers, a certificate of service. Pursuant to rule 0-5 under the Act, hearing

requests should state the nature of the writer’s interest, any facts bearing upon the desirability of

a hearing on the matter, the reason for the request, and the issues contested. Persons who wish to be

notified of a hearing may request notification by e-mailing the Commission’s Secretary at

Secretarys-Office@sec.gov.

ADDRESSES: Secretary, U.S. Securities & Exchange Commission: Secretarys-Office@sec.gov.

Applicants: legalnotices@fsinvestment.com.

FOR FURTHER INFORMATION: Barbara T. Heussler, Senior Counsel, at (202) 551-6990, or

Trace W. Rakestraw, Branch Chief, at (202) 551-6825 (Division of Investment Management, Chief

Counsel’s Office).

SUPPLEMENTARY INFORMATION: The following is a summary of the application. The

complete application may be obtained via the Commission’s website by searching for the file

number, or for an applicant using the Company name box at http://www.sec.gov/search/search.htm

or by calling (202) 551-8090.

Introduction:

1. The Applicants request an order of the Commission under sections 17(d) and 57(i) of

the Act and rule 17d-1 thereunder (the “Order”) to permit, subject to the terms and conditions set

forth in the application (the “Conditions”), a Regulated Fund2 and one or more other Regulated

2 “Regulated Funds” means the Fund and any Future Regulated Funds. “Future Regulated Fund”

means a closed-end management investment company (a) that is registered under the Act or has elected to be

regulated as a BDC, (b) whose investment adviser is an Adviser, and (c) that intends to participate in the

program of co-investments described in the application (“Co-Investment Program”). The definitions of

Regulated Funds and Future Regulated Funds do not include FS KKR Capital Corp., FS KKR Capital Corp.

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Funds and/or one or more Affiliated Funds3 to enter into Co-Investment Transactions with each

other. “Co-Investment Transaction” means any transaction in which one or more Regulated Funds

(or its Wholly-Owned Investment Sub (as defined below)) participated together with one or more

Affiliated Funds and/or one or more other Regulated Funds in reliance on the Order. “Potential Co-

Investment Transaction” means any investment opportunity in which a Regulated Fund (or its

Wholly-Owned Investment Sub) could not participate together with one or more Affiliated Funds

and/or one or more other Regulated Funds without obtaining and relying on the Order.4

Applicants:

2. The Fund is a closed-end management investment company registered under the Act

and organized as a Delaware Statutory Trust. The Fund has a seven member Board5 of which six

members are Independent Trustees.6

II, FS Energy & Power Fund and FS Credit Income Fund because such funds are already operating pursuant

to existing exemptive relief. See Corporate Capital Trust, Inc., et al., Investment Company Act Rel. Nos.

32642 (May 22, 2017)(notice) and 32683 (June 19, 2017)(order); Triloma EIG Energy Income Fund, et al.,

Investment Company Act Rel. Nos. 33047 (Mar. 14, 2018)(notice) and 33070 (Apr. 10, 2018)(order); and FS

Credit Income Fund, et al., Investment Company Act Rel. Nos. 33848 (Apr. 22, 2020)(notice) and 33871

(May 19, 2020)(order).

“Adviser” means FS, the Affiliated Fund Advisor and any future investment adviser that is (i)

controlling, under common control with, or controlled by FS Investments (as defined below), (ii) registered

as an investment adviser under the Investment Advisers Act of 1940 (the “Advisers Act”), and (iii) not a

Regulated Fund or a subsidiary of a Regulated Fund.

3 “Affiliated Fund” means any Existing Affiliated Fund any Future Affiliated Fund or any FS

Proprietary Account (as defined below). “Future Affiliated Fund” means any entity (a) whose investment

adviser is an Adviser, (b) that would be an investment company but for section 3(c)(1), 3(c)(5)(C) or 3(c)(7)

of the Act, and (c) that intends to participate in the Co-investment Program.

4 All existing entities that currently intend to rely on the Order have been named as Applicants and any

existing or future entities that may rely on the Order in the future will comply with the terms and Conditions

set forth in the application.

5 “Board” means the board of trustees (or the equivalent) of the applicable Regulated Fund.

6 “Independent Trustee” means a member of the Board of any relevant entity who is not an “interested

person” as defined in Section 2(a)(19) of the Act. No Independent Trustee of a Regulated Fund will have a

financial interest in any Co-Investment Transaction, other than indirectly through share ownership in one of

the Regulated Funds.

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3. FS, a Delaware limited liability company, is a registered investment adviser with the

Commission under the Advisers Act and serves as investment adviser to the Fund.

4. The Existing Affiliated Fund is a Delaware limited partnership that is a privately-

offered fund that would be an investment company but for section 3(c)(1) or 3(c)(7) of the Act. The

Affiliated Fund Advisor is a Delaware limited liability company and is registered as an investment

adviser with the Commission under the Advisers Act and serves as the investment adviser to the

Existing Affiliated Fund.7

5. FS Proprietary Accounts8 may hold various financial assets in a principal capacity.

Currently there are no FS Proprietary Accounts.

6. Applicants state that a Regulated Fund may, from time to time, form one or more

Wholly-Owned Investment Subs.9 Such a subsidiary may be prohibited from investing in a Co-

Investment Transaction with a Regulated Fund (other than its parent) or any Affiliated Fund

because it would be a company controlled by its parent Regulated Fund for purposes of section

7 FS and the Affiliated Fund Advisor are each a subsidiary of Franklin Square Holdings, L.P., a

Pennsylvania limited partnership (“FS Investments”). FS Investments is a leading asset manager dedicated

to helping individuals, financial professionals and institutions design better portfolios. FS Investments

currently owns a majority of each of FS and the Affiliated Funds Advisor. FS Investments does not currently

offer investment advisory services to any person and is not expected to do so in the future. Applicants state

that as a result, FS Investments has not been included as an Applicant.

8 “FS Proprietary Account” means any account of an Adviser or its affiliates or any company that is a

direct or indirect, wholly- or majority-owned subsidiary of the Adviser or its affiliates, which, from time to

time, may hold various financial assets in a principal capacity.

9 “Wholly-Owned Investment Sub” means an entity (i) that is wholly-owned by a Regulated Fund

(with such Regulated Fund at all times holding, beneficially and of record, 100% of the voting and economic

interests); (ii) whose sole business purpose is to hold one or more investments on behalf of such Regulated

Fund (and, in the case of a SBIC Subsidiary (defined below), maintain a license under the SBA Act (defined

below) and issue debentures guaranteed by the SBA (defined below)); (iii) with respect to which such

Regulated Fund’s Board has the sole authority to make all determinations with respect to the entity’s

participation under the Conditions; and (iv) that would be an investment company but for section 3(c)(1) or

3(c)(7) of the Act. “SBIC Subsidiary” means a Wholly-Owned Investment Sub that is licensed by the Small

Business Administration (the “SBA”) to operate under the Small Business Investment Act of 1958, as

amended, (the “SBA Act”) as a small business investment company.

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57(a)(4) and rule 17d-1. Applicants request that each Wholly-Owned Investment Sub be permitted

to participate in Co-Investment Transactions in lieu of the Regulated Fund that owns it and that the

Wholly-Owned Investment Sub’s participation in any such transaction be treated, for purposes of

the Order, as though the parent Regulated Fund were participating directly.

Applicants’ Representations:

A. Allocation Process

7. Applicants represent that the Adviser has established processes for allocating initial

investment opportunities, opportunities for subsequent investments in an issuer and dispositions of

securities holdings reasonably designed to treat all clients fairly and equitably. Further, Applicants

represent that these processes will be extended and modified in a manner reasonably designed to

ensure that the additional transactions permitted under the Order will both (i) be fair and equitable

to the Regulated Funds and the Affiliated Funds and (ii) comply with the Conditions.

8. Opportunities for Potential Co-Investment Transactions may arise when investment

advisory personnel of an Adviser becomes aware of investment opportunities that may be

appropriate for one or more Regulated Funds and one or more Affiliated Funds. If the requested

Order is granted, the Adviser will establish, maintain and implement policies and procedures

reasonably designed to ensure that, when such opportunities arise, the Adviser to the relevant

Regulated Funds is promptly notified and receives the same information about the opportunity as

any other Adviser considering the opportunity for its clients. In particular, consistent with

Condition 1, if a Potential Co-Investment Transaction falls within the then-current Objectives and

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Strategies10 and any Board-Established Criteria11 of a Regulated Fund, the policies and procedures

will require that the Adviser to such Regulated Fund receives sufficient information to allow such

Adviser’s investment committee to make its independent determination and recommendations under

the Conditions. The Adviser to each applicable Regulated Fund will then make an independent

determination of the appropriateness of the investment for the Regulated Fund in light of the

Regulated Fund’s then–current circumstances. If the Adviser to a Regulated Fund deems the

Regulated Fund’s participation in any Potential Co-Investment Transaction to be appropriate, it will

formulate a recommendation regarding the proposed order amount for the Regulated Fund.

9. Applicants state that, for each Regulated Fund and Affiliated Fund whose Adviser

recommends participating in a Potential Co-Investment Transaction, the Adviser’s investment

committee will approve an investment amount. Prior to the External Submission (as defined

below), each proposed order amount may be reviewed and adjusted, in accordance with the

Adviser’s written allocation policies and procedures, by the Adviser’s investment committee.12 The

10 “Objectives and Strategies” means a Regulated Fund’s investment objectives and strategies, as

described in its most current registration statement on Form N-2, other current filings with the Commission

under the Securities Act of 1933 (the “Securities Act”) or under the Securities Exchange Act of 1934, as

amended, and its most current report to stockholders.

11 “Board-Established Criteria” means criteria that the Board of a Regulated Fund may establish from

time to time to describe the characteristics of Potential Co-Investment Transactions regarding which the

Adviser to the Regulated Fund should be notified under Condition 1. The Board-Established Criteria will be

consistent with the Regulated Fund’s Objectives and Strategies. If no Board-Established Criteria are in

effect, then the Regulated Fund’s Adviser will be notified of all Potential Co-Investment Transactions that

fall within the Regulated Fund’s then-current Objectives and Strategies. Board-Established Criteria will be

objective and testable, meaning that they will be based on observable information, such as industry/sector of

the issuer, minimum EBITDA of the issuer, asset class of the investment opportunity or required

commitment size, and not on characteristics that involve a discretionary assessment. The Adviser to the

Regulated Fund may from time to time recommend criteria for the Board’s consideration, but Board-

Established Criteria will only become effective if approved by a majority of the Independent Trustees. The

Independent Trustees of a Regulated Fund may at any time rescind, suspend or qualify its approval of any

Board-Established Criteria, though Applicants anticipate that, under normal circumstances, the Board would

not modify these criteria more often than quarterly.

12 The reason for any such adjustment to a proposed order amount will be documented in writing and

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order of a Regulated Fund or Affiliated Fund resulting from this process is referred to as its

“Internal Order”. The Internal Order will be submitted for approval by the Required Majority of

any participating Regulated Funds in accordance with the Conditions.13

10. If the aggregate Internal Orders for a Potential Co-Investment Transaction do not

exceed the size of the investment opportunity immediately prior to the submission of the orders to

the underwriter, broker, dealer or issuer, as applicable (the “External Submission”), then each

Internal Order will be fulfilled as placed. If, on the other hand, the aggregate Internal Orders for a

Potential Co-Investment Transaction exceed the size of the investment opportunity immediately

prior to the External Submission, then the allocation of the opportunity will be made pro rata on the

basis of the size of the Internal Orders.14 If, subsequent to such External Submission, the size of the

opportunity is increased or decreased, or if the terms of such opportunity, or the facts and

circumstances applicable to the Regulated Funds’ or the Affiliated Fund’s consideration of the

opportunity change, the participants will be permitted to submit revised Internal Orders in

accordance with written allocation policies and procedures that the Advisers will establish,

implement and maintain.15

preserved in the records of the Advisers.

13 “Required Majority” means a required majority, as defined in section 57(o) of the Act. In the case of

a Regulated Fund that is a registered closed-end fund, the Board members that make up the Required

Majority will be determined as if the Regulated Fund were a BDC subject to section 57(o).

14 Each Adviser will maintain records of all proposed order amounts, Internal Orders and External

Submissions in conjunction with Potential Co-Investment Transactions. Each applicable Adviser will

provide the Eligible Trustees with information concerning the Affiliated Fund’s and Regulated Funds’ order

sizes to assist the Eligible Trustees with their review of the applicable Regulated Fund’s investments for

compliance with the Conditions. “Eligible Trustees” means, with respect to a Regulated Fund and a

Potential Co-Investment Transaction, the members of the Regulated Fund’s Board eligible to vote on that

Potential Co-Investment Transaction under section 57(o) of the Act (treating any registered investment

company or series thereof as a BDC for this purpose).

15 The Board of the Regulated Fund will then either approve or disapprove of the investment

opportunity in accordance with Condition 2, 6, 7, 8 or 9, as applicable.

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B. Follow-On Investments

11. Applicants state that from time to time the Regulated Funds and Affiliated Funds

may have opportunities to make Follow-On Investments16 in an issuer in which a Regulated Fund

and one or more other Regulated Funds and/or Affiliated Funds previously have invested.

12. Applicants propose that Follow-On Investments would be divided into two

categories depending on whether the prior investment was a Co-Investment Transaction or a Pre-

Boarding Investment.17 If the Regulated Funds and Affiliated Fund had previously participated in a

Co-Investment Transaction with respect to the issuer, then the terms and approval of the Follow-On

Investment would be subject to the Standard Review Follow-Ons described in Condition 8. If the

Regulated Funds and Affiliated Fund have not previously participated in a Co-Investment

Transaction with respect to the issuer but hold a Pre-Boarding Investment, then the terms and

approval of the Follow-On Investment would be subject to the Enhanced-Review Follow-Ons

described in Condition 9. All Enhanced Review Follow-Ons require the approval of the Required

Majority. For a given issuer, the participating Regulated Funds and Affiliated Fund would need to

comply with the requirements of Enhanced-Review Follow-Ons only for the first Co-Investment

16 “Follow-On Investment” means an additional investment in the same issuer, including, but not

limited to, through the exercise of warrants, conversion privileges or other rights to purchase securities of the

issuer.

17 “Pre-Boarding Investments” are investments in an issuer held by a Regulated Fund as well as one or

more Affiliated Funds and/or one or more other Regulated Funds that were acquired prior to participating in

any Co-Investment Transaction: (i) in transactions in which the only term negotiated by or on behalf of such

funds was price in reliance on one of the JT No-Action Letters (defined below); or (ii) in transactions

occurring at least 90 days apart and without coordination between the Regulated Fund and any Affiliated

Fund or other Regulated Fund.

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Transaction. Subsequent Co-Investment Transactions with respect to the issuer would be governed

by the requirements of Standard Review Follow-Ons.

13. A Regulated Fund would be permitted to invest in Standard Review Follow-Ons

either with the approval of the Required Majority under Condition 8(c) or without Board approval

under Condition 8(b) if it is (i) a Pro Rata Follow-On Investment18 or (ii) a Non-Negotiated Follow-

On Investment.19 Applicants believe that these Pro Rata and Non-Negotiated Follow-On

Investments do not present a significant opportunity for overreaching on the part of any Adviser and

thus do not warrant the time or the attention of the Board. Pro Rata Follow-On Investments and

Non-Negotiated Follow-On Investments remain subject to the Board’s periodic review in

accordance with Condition 10.

C. Dispositions

14. Applicants propose that Dispositions20 would be divided into two categories. If the

Regulated Funds and Affiliated Fund holding investments in the issuer have previously participated

in a Co-Investment Transaction with respect to the issuer, then the terms and approval of the

Disposition would be subject to the Standard Review Dispositions described in Condition 6. If the

18 A “Pro Rata Follow-On Investment” is a Follow-On Investment (i) in which the participation of each

Affiliated Fund and each Regulated Fund is proportionate to its outstanding investments in the issuer or

security, as appropriate, immediately preceding the Follow-On Investment, and (ii) in the case of a Regulated

Fund, a majority of the Board has approved the Regulated Fund’s participation in the pro rata Follow-On

Investments as being in the best interests of the Regulated Fund. The Regulated Fund’s Board may refuse to

approve, or at any time rescind, suspend or qualify, its approval of Pro Rata Follow-On Investments, in

which case all subsequent Follow-On Investments will be submitted to the Regulated Fund’s Eligible

Trustees in accordance with Condition 8(c).

19 A “Non-Negotiated Follow-On Investment” is a Follow-On Investment in which a Regulated Fund

participates together with one or more Affiliated Funds and/or one or more other Regulated Funds (i) in

which the only term negotiated by or on behalf of the funds is price and (ii) with respect to which, if the

transaction were considered on its own, the funds would be entitled to rely on one of the JT No-Action

Letters. “JT No-Action Letters” means SMC Capital, Inc., SEC No-Action Letter (pub. avail. Sept. 5, 1995)

and Massachusetts Mutual Life Insurance Company, SEC No-Action Letter (pub. avail. June 7, 2000).

20 “Disposition” means the sale, exchange or other disposition of an interest in a security of an issuer.

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Regulated Funds and Affiliated Fund have not previously participated in a Co-Investment

Transaction with respect to the issuer but hold a Pre-Boarding Investment, then the terms and

approval of the Disposition would be subject to the Enhanced Review Dispositions described in

Condition 7. Subsequent Dispositions with respect to the same issuer would be governed by

Condition 6 under the Standard Review Dispositions.21

15. A Regulated Fund may participate in a Standard Review Disposition either with the

approval of the Required Majority under Condition 6(d) or without Board approval under Condition

6(c) if (i) the Disposition is a Pro Rata Disposition22 or (ii) the securities are Tradable Securities23

and the Disposition meets the other requirements of Condition 6(c)(ii). Pro Rata Dispositions and

Dispositions of a Tradable Security remain subject to the Board’s periodic review in accordance

with Condition 10.

21 However, with respect to an issuer, if a Regulated Fund’s first Co-Investment Transaction is an

Enhanced Review Disposition, and the Regulated Fund does not dispose of its entire position in the

Enhanced Review Disposition, then before such Regulated Fund may complete its first Standard Review

Follow-On in such issuer, the Eligible Trustees must review the proposed Follow-On Investment not only on

a stand-alone basis but also in relation to the total economic exposure in such issuer (i.e., in combination with

the portion of the Pre-Boarding Investment not disposed of in the Enhanced Review Disposition), and the

other terms of the investments. This additional review would be required because such findings would not

have been required in connection with the prior Enhanced Review Disposition, but they would have been

required had the first Co-Investment Transaction been an Enhanced Review Follow-On.

22 A “Pro Rata Disposition” is a Disposition (i) in which the participation of each Affiliated Fund and

each Regulated Fund is proportionate to its outstanding investment in the security subject to Disposition

immediately preceding the Disposition; and (ii) in the case of a Regulated Fund, a majority of the Board has

approved the Regulated Fund’s participation in pro rata Dispositions as being in the best interests of the

Regulated Fund. The Regulated Fund’s Board may refuse to approve, or at any time rescind, suspend or

qualify, its approval of Pro Rata Dispositions, in which case all subsequent Dispositions will be submitted to

the Regulated Fund’s Eligible Trustees.

23 “Tradable Security” means a security that meets the following criteria at the time of Disposition:

(i) it trades on a national securities exchange or designated offshore securities market as defined in rule

902(b) under the Securities Act; (ii) it is not subject to restrictive agreements with the issuer or other security

holders; and (iii) it trades with sufficient volume and liquidity (findings as to which are documented by the

Advisers to any Regulated Funds holding investments in the issuer and retained for the life of the Regulated

Fund) to allow each Regulated Fund to dispose of its entire position remaining after the proposed Disposition

within a short period of time not exceeding 30 days at approximately the value (as defined by section

2(a)(41) of the Act) at which the Regulated Fund has valued the investment.

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D. Delayed Settlement

16. Applicants represent that under the terms and Conditions of the application, all

Regulated Funds and Affiliated Funds participating in a Co-Investment Transaction will invest at

the same time, for the same price and with the same terms, conditions, class, registration rights and

any other rights, so that none of them receives terms more favorable than any other. However, the

settlement date for the Affiliated Fund in a Co-Investment Transaction may occur up to ten business

days after the settlement date for a Regulated Fund, and vice versa. Nevertheless, in all cases, (i)

the date on which the commitment of the Affiliated Funds and Regulated Funds is made will be the

same even where the settlement date is not and (ii) the earliest settlement date and the latest

settlement date of any Affiliated Fund or Regulated Fund participating in the transaction will occur

within ten business days of each other.

E. Holders

17. Under Condition 15, if an Adviser, its principals, or any person controlling,

controlled by, or under common control with the Adviser or its principals, and the Affiliated Fund

(collectively, the “Holders”) own in the aggregate more than 25 percent of the outstanding voting

shares of a Regulated Fund (the “Shares”), then the Holders will vote such Shares as directed by an

independent third party when voting on matters specified in the Condition. Applicants believe that

this Condition will ensure that the Independent Trustees will act independently in evaluating Co-

Investment Transactions, because the ability of an Adviser or its principals to influence the

Independent Trustees by a suggestion, explicit or implied, that the Independent Trustees can be

removed will be limited significantly. The Independent Trustees shall evaluate and approve any

independent party, taking into account its qualifications, reputation for independence, cost to the

shareholders, and other factors that they deem relevant.

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Applicants’ Legal Analysis:

1. Section 17(d) of the Act and rule 17d-1 under the Act prohibit participation by a

registered investment company and an affiliated person in any “joint enterprise or other joint

arrangement or profit-sharing plan,” as defined in the rule, without prior approval by the

Commission by order upon application. Section 17(d) of the Act and rule 17d-1 under the Act are

applicable to Regulated Funds that are registered closed-end investment companies.

2. Similarly, with regard to BDCs, section 57(a)(4) of the Act generally prohibits

certain persons specified in section 57(b) from participating in joint transactions with the BDC or a

company controlled by the BDC in contravention of rules as prescribed by the Commission.

Section 57(i) of the Act provides that, until the Commission prescribes rules under section 57(a)(4),

the Commission’s rules under section 17(d) of the Act applicable to registered closed-end

investment companies will be deemed to apply to transactions subject to section 57(a)(4). Because

the Commission has not adopted any rules under section 57(a)(4), rule 17d-1 also applies to joint

transactions with Regulated Funds that are BDCs.

3. Co-Investment Transactions are prohibited by either or both of rule 17d-1 and

section 57(a)(4) without a prior exemptive order of the Commission to the extent that the Affiliated

Funds and the Regulated Funds participating in such transaction fall within the category of persons

described by rule 17d-1 and/or section 57(b), as modified by rule 57b-1 thereunder, as applicable,

vis-à-vis each participating Regulated Fund. Each of the participating Regulated Funds and

Affiliated Funds may be deemed to be affiliated persons vis-à-vis a Regulated Fund within the

meaning of section 2(a)(3) by reason of common control because (i) the Affiliated Fund Advisor

manages, and may be deemed to control, the Existing Affiliated Fund and any other Affiliated Fund

will be managed by, and may be deemed to be controlled by, an Adviser to Affiliated Funds; (ii) FS

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is the investment adviser to, and may be deemed to control, the Fund and an Adviser to the

Regulated Funds will be the investment adviser to, and may be deemed to control, any Future

Regulated Fund; and (iii) the Advisers to Affiliated Funds and the Advisers to Regulated Funds are

under common control. Thus, each of the Affiliated Funds could be deemed to be a person related

to the Regulated Funds in a manner described by section 57(b) and related to the other Regulated

Funds in a manner described by rule 17d-1; and therefore the prohibitions of rule 17d-1 and section

57(a)(4) would apply respectively to prohibit the Affiliated Funds from participating in Co-

Investment Transactions with the Regulated Funds. Each Regulated Fund would also be related to

each other Regulated Fund in a manner described by section 57(b) or rule 17d-1, as applicable, and

thus prohibited from participating in Co-Investment Transactions with each other. In addition,

because the FS Proprietary Accounts are controlled by the Adviser or its affiliates and, therefore,

may be under common control with the Fund, any future Advisers, and any Future Regulated

Funds, the FS Proprietary Accounts could be deemed to be persons related to the Regulated Funds

(or a company controlled by the Regulated Funds) in a manner described by section 17(d) or section

57(b) and also prohibited from participating in the Co-Investment Program.

4. In passing upon applications under rule 17d-1, the Commission considers whether

the company’s participation in the joint transaction is consistent with the provisions, policies, and

purposes of the Act and the extent to which such participation is on a basis different from or less

advantageous than that of other participants.

5. Applicants state that in the absence of the requested relief, in many circumstances

the Regulated Funds would be limited in their ability to participate in attractive and appropriate

investment opportunities. Applicants state that, as required by rule 17d-1(b), the Conditions ensure

that the terms on which Co-Investment Transactions may be made will be consistent with the

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participation of the Regulated Funds being on a basis that it is neither different from nor less

advantageous than other participants, thus protecting the equity holders of any participant from

being disadvantaged. Applicants further state that the Conditions ensure that all Co-Investment

Transactions are reasonable and fair to the Regulated Funds and their shareholders and do not

involve overreaching by any person concerned, including the Advisers. Applicants state that the

Regulated Funds’ participation in the Co-Investment Transactions in accordance with the

Conditions will be consistent with the provisions, policies, and purposes of the Act and would be

done in a manner that is not different from, or less advantageous than, that of other participants.

Applicants’ Conditions:

Applicants agree that the Order shall be subject to the following Conditions:

1. Identification and Referral of Potential Co-Investment Transactions.

(a) The Advisers will establish, maintain and implement policies and procedures

reasonably designed to ensure that each Adviser is promptly notified of all Potential Co-Investment

Transactions that fall within the then-current Objectives and Strategies and Board-Established

Criteria of any Regulated Fund the Adviser manages.

(b) When an Adviser to a Regulated Fund is notified of a Potential Co-Investment

Transaction under Condition 1(a), the Adviser will make an independent determination of the

appropriateness of the investment for the Regulated Fund in light of the Regulated Fund’s then-

current circumstances.

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2. Board Approvals of Co-Investment Transactions.

(a) If an Adviser deems a Regulated Fund’s participation in any Potential Co-Investment

Transaction to be appropriate for the Regulated Fund, it will then determine an appropriate level of

investment for the Regulated Fund.

(b) If the aggregate amount recommended by the Advisers to be invested in the Potential

Co-Investment Transaction by the participating Regulated Funds and any participating Affiliated

Fund, collectively, exceeds the amount of the investment opportunity, the investment opportunity

will be allocated among them pro rata based on the size of the Internal Orders, as described in

section III.A.1.b. of the application. Each Adviser to a participating Regulated Fund will promptly

notify and provide the Eligible Trustees with information concerning the Affiliated Fund’s and

Regulated Funds’ order sizes to assist the Eligible Trustees with their review of the applicable

Regulated Fund’s investments for compliance with these Conditions.

(c) After making the determinations required in Condition 1(b) above, each Adviser to a

participating Regulated Fund will distribute written information concerning the Potential Co-

Investment Transaction (including the amount proposed to be invested by each participating

Regulated Fund and each participating Affiliated Fund) to the Eligible Trustees of its participating

Regulated Fund(s) for their consideration. A Regulated Fund will enter into a Co-Investment

Transaction with one or more other Regulated Funds or the Affiliated Fund only if, prior to the

Regulated Fund’s participation in the Potential Co-Investment Transaction, a Required Majority

concludes that:

(i) the terms of the transaction, including the consideration to be paid, are

reasonable and fair to the Regulated Fund and its shareholders and do not involve

16

overreaching in respect of the Regulated Fund or its shareholders on the part of any person

concerned;

(ii) the transaction is consistent with:

(A) the interests of the Regulated Fund’s shareholders; and

(B) the Regulated Fund’s then-current Objectives and Strategies;

(iii) the investment by any other Regulated Fund(s) or Affiliated Fund(s) would

not disadvantage the Regulated Fund, and participation by the Regulated Fund would not be

on a basis different from, or less advantageous than, that of any other Regulated Fund(s) or

Affiliated Fund(s) participating in the transaction; provided that the Required Majority shall

not be prohibited from reaching the conclusions required by this Condition 2(c)(iii) if:

(A) the settlement date for another Regulated Fund or an Affiliated Fund

in a Co-Investment Transaction is later than the settlement date for the Regulated

Fund by no more than ten business days or earlier than the settlement date for the

Regulated Fund by no more than ten business days, in either case, so long as: (x) the

date on which the commitment of the Affiliated Fund and Regulated Funds is made

is the same; and (y) the earliest settlement date and the latest settlement date of any

Affiliated Fund or Regulated Fund participating in the transaction will occur within

ten business days of each other; or

(B) any other Regulated Fund or Affiliated Fund, but not the Regulated

Fund itself, gains the right to nominate a director for election to a portfolio

company’s board of directors, the right to have a board observer or any similar right

to participate in the governance or management of the portfolio company so long as:

(x) the Eligible Trustees will have the right to ratify the selection of such director or

17

board observer, if any; (y) the Adviser agrees to, and does, provide periodic reports

to the Regulated Fund’s Board with respect to the actions of such director or the

information received by such board observer or obtained through the exercise of any

similar right to participate in the governance or management of the portfolio

company; and (z) any fees or other compensation that any other Regulated Fund or

Affiliated Fund or any affiliated person of any other Regulated Fund or Affiliated

Fund receives in connection with the right of one or more Regulated Funds or

Affiliated Funds to nominate a director or appoint a board observer or otherwise to

participate in the governance or management of the portfolio company will be shared

proportionately among any participating Affiliated Funds (who may, in turn, share

their portion with their affiliated persons) and any participating Regulated Fund(s) in

accordance with the amount of each such party’s investment; and

(iv) the proposed investment by the Regulated Fund will not involve

compensation, remuneration or a direct or indirect24 financial benefit to the Advisers, any

other Regulated Fund, the Affiliated Fund or any affiliated person of any of them (other than

the parties to the Co-Investment Transaction), except (A) to the extent permitted by

Condition 14, (B) to the extent permitted by section 17(e) or 57(k), as applicable,

(C) indirectly, as a result of an interest in the securities issued by one of the parties to the

Co-Investment Transaction, or (D) in the case of fees or other compensation described in

Condition 2(c)(iii)(B)(z).

24 For example, procuring the Regulated Fund’s investment in a Potential Co-Investment Transaction to

permit an affiliate to complete or obtain better terms in a separate transaction would constitute an indirect

financial benefit.

18

3. Right to Decline. Each Regulated Fund has the right to decline to participate in any

Potential Co-Investment Transaction or to invest less than the amount proposed.

4. General Limitation. Except for Follow-On Investments made in accordance with

Conditions 8 and 9 below,25 a Regulated Fund will not invest in reliance on the Order in any issuer

in which a Related Party has an investment.26

5. Same Terms and Conditions. A Regulated Fund will not participate in any Potential

Co-Investment Transaction unless (i) the terms, conditions, price, class of securities to be

purchased, date on which the commitment is entered into and registration rights (if any) will be the

same for each participating Regulated Fund and Affiliated Fund and (ii) the earliest settlement date

and the latest settlement date of any participating Regulated Fund or Affiliated Fund will occur as

close in time as practicable and in no event more than ten business days apart. The grant to one or

more Regulated Funds or Affiliated Funds, but not the respective Regulated Fund, of the right to

nominate a director for election to a portfolio company’s board of directors, the right to have an

observer on the board of directors or similar rights to participate in the governance or management

of the portfolio company will not be interpreted so as to violate this Condition 5, if Condition

2(c)(iii)(B) is met.

6. Standard Review Dispositions.

25 This exception applies only to Follow-On Investments by a Regulated Fund in issuers in which that

Regulated Fund already holds investments.

26 “Related Party” means (i) any Close Affiliate and (ii) in respect of matters as to which any Adviser

has knowledge, any Remote Affiliate. “Close Affiliate” means the Advisers, the Regulated Funds, the

Affiliated Fund and any other person described in section 57(b) (after giving effect to rule 57b-1) in respect

of any Regulated Fund (treating any registered investment company or series thereof as a BDC for this

purpose) except for limited partners included solely by reason of the reference in section 57(b) to section

2(a)(3)(D). “Remote Affiliate” means any person described in section 57(e) in respect of any Regulated

Fund (treating any registered investment company or series thereof as a BDC for this purpose) and any

limited partner holding 5% or more of the relevant limited partner interests that would be a Close Affiliate

but for the exclusion in that definition.

19

(a) General. If any Regulated Fund or Affiliated Fund elects to sell, exchange or

otherwise dispose of an interest in a security and one or more Regulated Funds and Affiliated Funds

have previously participated in a Co-Investment Transaction with respect to the issuer, then:

(i) the Adviser to such Regulated Fund or Affiliated Fund27 will notify each

Regulated Fund that holds an investment in the issuer of the proposed Disposition at the

earliest practical time; and

(ii) the Adviser to each Regulated Fund that holds an investment in the issuer

will formulate a recommendation as to participation by such Regulated Fund in the

Disposition.

(b) Same Terms and Conditions. Each Regulated Fund will have the right to participate

in such Disposition on a proportionate basis, at the same price and on the same terms and conditions

as those applicable to the Affiliated Fund and any other Regulated Fund.

(c) No Board Approval Required. A Regulated Fund may participate in such a

Disposition without obtaining prior approval of the Required Majority if:

(i) (A) the participation of each Regulated Fund and Affiliated Fund in such

Disposition is proportionate to its then-current holding of the security (or securities) of the

issuer that is (or are) the subject of the Disposition28; (B) the Board of the Regulated Fund

has approved as being in the best interests of the Regulated Fund the ability to participate in

such Dispositions on a pro rata basis (as described in greater detail in the application); and

27 Any FS Proprietary Account that is not advised by the Adviser is itself deemed to be an Adviser for

purposes of Conditions 6(a)(i), 7(a)(i), 8(a)(i) and 9(a)(i).

28 In the case of any Disposition, proportionality will be measured by each participating Regulated

Fund’s and Affiliated Fund’s outstanding investment in the security in question immediately preceding the

Disposition.

20

(C) the Board of the Regulated Fund is provided on a quarterly basis with a list of all

Dispositions made in accordance with this Condition; or

(ii) each security is a Tradable Security and (A) the Disposition is not to the

issuer or any affiliated person of the issuer; and (B) the security is sold for cash in a

transaction in which the only term negotiated by or on behalf of the participating Regulated

Funds and Affiliated Funds is price.

(d) Standard Board Approval. In all other cases, the Adviser will provide its written

recommendation as to the Regulated Fund’s participation to the Eligible Trustees and the Regulated

Fund will participate in such Disposition solely to the extent that a Required Majority determines

that it is in the Regulated Fund’s best interests.

7. Enhanced Review Dispositions.

(a) General. If any Regulated Fund or Affiliated Fund elects to sell, exchange or

otherwise dispose of a Pre-Boarding Investment in a Potential Co-Investment Transaction and the

Regulated Funds and Affiliated Fund have not previously participated in a Co-Investment

Transaction with respect to the issuer:

(i) the Adviser to such Regulated Fund or Affiliated Fund will notify each

Regulated Fund that holds an investment in the issuer of the proposed Disposition at the

earliest practical time;

(ii) the Adviser to each Regulated Fund that holds an investment in the issuer

will formulate a recommendation as to participation by such Regulated Fund in the

Disposition; and

(iii) the Advisers will provide to the Board of each Regulated Fund that holds an

investment in the issuer all information relating to the existing investments in the issuer of

21

the Regulated Funds and Affiliated Fund, including the terms of such investments and how

they were made, that is necessary for the Required Majority to make the findings required

by this Condition.

(b) Enhanced Board Approval. The Adviser will provide its written recommendation as

to the Regulated Fund’s participation to the Eligible Trustees, and the Regulated Fund will

participate in such Disposition solely to the extent that a Required Majority determines that:

(i) the Disposition complies with Condition 2(c)(i), (ii), (iii)(A), and (iv); and

(ii) the making and holding of the Pre-Boarding Investments were not prohibited

by section 57 or rule 17d-1, as applicable, and records the basis for the finding in the Board

minutes.

(c) Additional Requirements. The Disposition may only be completed in reliance on the

Order if:

(i) Same Terms and Conditions. Each Regulated Fund has the right to

participate in such Disposition on a proportionate basis, at the same price and on the same

terms and Conditions as those applicable to the Affiliated Fund and any other Regulated

Fund;

(ii) Original Investments. All of the Affiliated Fund’s and Regulated Funds’

investments in the issuer are Pre-Boarding Investments;

(iii) Advice of counsel. Independent counsel to the Board advises that the making

and holding of the investments in the Pre-Boarding Investments were not prohibited by

section 57 (as modified by rule 57b-1) or rule 17d-1, as applicable;

(iv) Multiple Classes of Securities. All Regulated Funds and Affiliated Funds

that hold Pre-Boarding Investments in the issuer immediately before the time of completion

22

of the Co-Investment Transaction hold the same security or securities of the issuer. For the

purpose of determining whether the Regulated Funds and Affiliated Fund hold the same

security or securities, they may disregard any security held by some but not all of them if,

prior to relying on the Order, the Required Majority is presented with all information

necessary to make a finding, and finds, that: (x) any Regulated Fund’s or Affiliated Fund’s

holding of a different class of securities (including for this purpose a security with a

different maturity date) is immaterial29 in amount, including immaterial relative to the size

of the issuer; and (y) the Board records the basis for any such finding in its minutes. In

addition, securities that differ only in respect of issuance date, currency, or denominations

may be treated as the same security; and

(v) No control. The Affiliated Fund, the other Regulated Funds and their

affiliated persons (within the meaning of section 2(a)(3)(C) of the Act), individually or in

the aggregate, do not control the issuer of the securities (within the meaning of section

2(a)(9) of the Act).

8. Standard Review Follow-Ons.

(a) General. If any Regulated Fund or Affiliated Fund desires to make a Follow-On

Investment in an issuer and the Regulated Funds and Affiliated Funds holding investments in the

issuer previously participated in a Co-Investment Transaction with respect to the issuer:

(i) the Adviser to each such Regulated Fund or Affiliated Fund will notify each

Regulated Fund that holds securities of the portfolio company of the proposed transaction at

the earliest practical time; and

29 In determining whether a holding is “immaterial” for purposes of the Order, the Required Majority

will consider whether the nature and extent of the interest in the transaction or arrangement is sufficiently

small that a reasonable person would not believe that the interest affected the determination of whether to

enter into the transaction or arrangement or the terms of the transaction or arrangement.

23

(ii) the Adviser to each Regulated Fund that holds an investment in the issuer

will formulate a recommendation as to the proposed participation, including the amount of

the proposed investment, by such Regulated Fund.

(b) No Board Approval Required. A Regulated Fund may participate in the Follow-On

Investment without obtaining prior approval of the Required Majority if:

(i) (A) the proposed participation of each Regulated Fund and each Affiliated

Fund in such investment is proportionate to its outstanding investments in the issuer or the

security at issue, as appropriate,30 immediately preceding the Follow-On Investment; and

(B) the Board of the Regulated Fund has approved as being in the best interests of the

Regulated Fund the ability to participate in Follow-On Investments on a pro rata basis (as

described in greater detail in the application); or

(ii) it is a Non-Negotiated Follow-On Investment.

(c) Standard Board Approval. In all other cases, the Adviser will provide its written

recommendation as to the Regulated Fund’s participation to the Eligible Trustees and the Regulated

Fund will participate in such Follow-On Investment solely to the extent that a Required Majority

makes the determinations set forth in Condition 2(c). If the only previous Co-Investment

Transaction with respect to the issuer was an Enhanced Review Disposition the Eligible Trustees

must complete this review of the proposed Follow-On Investment both on a stand-alone basis and

30 To the extent that a Follow-On Investment opportunity is in a security or arises in respect of a

security held by the participating Regulated Funds and any Affiliated Fund, proportionality will be measured

by each participating Regulated Fund’s and Affiliated Fund’s outstanding investment in the security in

question immediately preceding the Follow-On Investment using the most recent available valuation thereof.

To the extent that a Follow-On Investment opportunity relates to an opportunity to invest in a security that is

not in respect of any security held by any of the participating Regulated Funds or any Affiliated Fund,

proportionality will be measured by each participating Regulated Fund’s and Affiliated Fund’s outstanding

investment in the issuer immediately preceding the Follow-On Investment using the most recent available

valuation thereof.

24

together with the Pre-Boarding Investments in relation to the total economic exposure and other

terms of the investment.

(d) Allocation. If, with respect to any such Follow-On Investment:

(i) the amount of the opportunity proposed to be made available to any

Regulated Fund is not based on the Regulated Funds’ and the Affiliated Fund’s outstanding

investments in the issuer or the security at issue, as appropriate, immediately preceding the

Follow-On Investment; and

(ii) the aggregate amount recommended by the Advisers to be invested in the

Follow-On Investment by the participating Regulated Funds and any participating Affiliated

Fund, collectively, exceeds the amount of the investment opportunity, then the Follow-On

Investment opportunity will be allocated among them pro rata based on the size of the

Internal Orders, as described in section III.A.1.b. of the application.

(e) Other Conditions. The acquisition of Follow-On Investments as permitted by this

Condition will be considered a Co-Investment Transaction for all purposes and subject to the other

Conditions set forth in the application.

9. Enhanced Review Follow-Ons.

(a) General. If any Regulated Fund or Affiliated Fund desires to make a Follow-On

Investment in an issuer that is a Potential Co-Investment Transaction and the Regulated Funds and

any Affiliated Fund holding investments in the issuer have not previously participated in a Co-

Investment Transaction with respect to the issuer:

(i) the Adviser to each such Regulated Fund or Affiliated Fund will notify each

Regulated Fund that holds securities of the portfolio company of the proposed transaction at

the earliest practical time;

25

(ii) the Adviser to each Regulated Fund that holds an investment in the issuer

will formulate a recommendation as to the proposed participation, including the amount of

the proposed investment, by such Regulated Fund; and

(iii) the Advisers will provide to the Board of each Regulated Fund that holds an

investment in the issuer all information relating to the existing investments in the issuer of

the Regulated Funds and Affiliated Fund, including the terms of such investments and how

they were made, that is necessary for the Required Majority to make the findings required

by this Condition.

(b) Enhanced Board Approval. The Adviser will provide its written recommendation as

to the Regulated Fund’s participation to the Eligible Trustees, and the Regulated Fund will

participate in such Follow-On Investment solely to the extent that a Required Majority reviews the

proposed Follow-On Investment both on a stand-alone basis and together with the Pre-Boarding

Investments in relation to the total economic exposure and other terms and makes the

determinations set forth in Condition 2(c). In addition, the Follow-On Investment may only be

completed in reliance on the Order if the Required Majority of each participating Regulated Fund

determines that the making and holding of the Pre-Boarding Investments were not prohibited by

section 57 (as modified by rule 57b-1) or rule 17d-1, as applicable. The basis for the Board’s

findings will be recorded in its minutes.

(c) Additional Requirements. The Follow-On Investment may only be completed in

reliance on the Order if:

(i) Original Investments. All of the Affiliated Fund’s and Regulated Funds’

investments in the issuer are Pre-Boarding Investments;

26

(ii) Advice of counsel. Independent counsel to the Board advises that the making

and holding of the investments in the Pre-Boarding Investments were not prohibited by

section 57 (as modified by rule 57b-1) or rule 17d-1, as applicable;

(iii) Multiple Classes of Securities. All Regulated Funds and Affiliated Funds

that hold Pre-Boarding Investments in the issuer immediately before the time of completion

of the Co-Investment Transaction hold the same security or securities of the issuer. For the

purpose of determining whether the Regulated Funds and Affiliated Fund hold the same

security or securities, they may disregard any security held by some but not all of them if,

prior to relying on the Order, the Required Majority is presented with all information

necessary to make a finding, and finds, that: (x) any Regulated Fund’s or Affiliated Fund’s

holding of a different class of securities (including for this purpose a security with a

different maturity date) is immaterial in amount, including immaterial relative to the size of

the issuer; and (y) the Board records the basis for any such finding in its minutes. In

addition, securities that differ only in respect of issuance date, currency, or denominations

may be treated as the same security; and

(iv) No control. The Affiliated Fund, the other Regulated Funds and their

affiliated persons (within the meaning of section 2(a)(3)(C) of the Act), individually or in

the aggregate, do not control the issuer of the securities (within the meaning of section

2(a)(9) of the Act).

(d) Allocation. If, with respect to any such Follow-On Investment:

(i) the amount of the opportunity proposed to be made available to any

Regulated Fund is not based on the Regulated Funds’ and the Affiliated Fund’s outstanding

27

investments in the issuer or the security at issue, as appropriate, immediately preceding the

Follow-On Investment; and.

(ii) the aggregate amount recommended by the Advisers to be invested in the

Follow-On Investment by the participating Regulated Funds and any participating Affiliated

Fund, collectively, exceeds the amount of the investment opportunity,

then the Follow-On Investment opportunity will be allocated among them pro rata based on

the size of the Internal Orders, as described in section III.A.1.b of the application.

(e) Other Conditions. The acquisition of Follow-On Investments as permitted by this

Condition will be considered a Co-Investment Transaction for all purposes and subject to the other

Conditions set forth in the application.

10. Board Reporting, Compliance and Annual Re-Approval.

(a) Each Adviser to a Regulated Fund will present to the Board of each Regulated Fund,

on a quarterly basis, and at such other times as the Board may request, (i) a record of all investments

in Potential Co-Investment Transactions made by any of the other Regulated Funds or any

Affiliated Fund during the preceding quarter that fell within the Regulated Fund’s then-current

Objectives and Strategies and Board-Established Criteria that were not made available to the

Regulated Fund, and an explanation of why such investment opportunities were not made available

to the Regulated Fund; (ii) a record of all Follow-On Investments in and Dispositions of

investments in any issuer in which the Regulated Fund holds any investments by any Affiliated

Fund or other Regulated Fund during the prior quarter; and (iii) all information concerning Potential

Co-Investment Transactions and Co-Investment Transactions, including investments made by other

Regulated Funds or any Affiliated Fund that the Regulated Fund considered but declined to

participate in, so that the Independent Trustees, may determine whether all Potential Co-Investment

28

Transactions and Co-Investment Transactions during the preceding quarter, including those

investments that the Regulated Fund considered but declined to participate in, comply with the

Conditions.

(b) All information presented to the Regulated Fund’s Board pursuant to this Condition

will be kept for the life of the Regulated Fund and at least two years thereafter, and will be subject

to examination by the Commission and its staff.

(c) Each Regulated Fund’s chief compliance officer, as defined in rule 38a-1(a)(4), will

prepare an annual report for its Board each year that evaluates (and documents the basis of that

evaluation) the Regulated Fund’s compliance with the terms and Conditions of the application and

the procedures established to achieve such compliance.

(d) The Independent Trustees will consider at least annually whether continued

participation in new and existing Co-Investment Transactions is in the Regulated Fund’s best

interests.

11. Record Keeping. Each Regulated Fund will maintain the records required by section

57(f)(3) of the Act as if each of the Regulated Funds were a BDC and each of the investments

permitted under these Conditions were approved by the Required Majority under section 57(f).

12. Trustee Independence. No Independent Trustee of a Regulated Fund will also be a

director, general partner, managing member or principal, or otherwise be an “affiliated person” (as

defined in the Act) of any Affiliated Fund.

13. Expenses. The expenses, if any, associated with acquiring, holding or disposing of

any securities acquired in a Co-Investment Transaction (including, without limitation, the expenses

of the distribution of any such securities registered for sale under the Securities Act) will, to the

extent not payable by the Advisers under their respective advisory agreements with the Regulated

29

Funds and the Affiliated Fund, be shared by the Regulated Funds and any participating Affiliated

Fund in proportion to the relative amounts of the securities held or being acquired or disposed of, as

the case may be.

14. Transaction Fees.31 Any transaction fee (including break-up, structuring, monitoring

or commitment fees but excluding brokerage or underwriting compensation permitted by section

17(e) or 57(k)) received in connection with any Co-Investment Transaction will be distributed to the

participants on a pro rata basis based on the amounts they invested or committed, as the case may

be, in such Co-Investment Transaction. If any transaction fee is to be held by an Adviser pending

consummation of the transaction, the fee will be deposited into an account maintained by the

Adviser at a bank or banks having the qualifications prescribed in section 26(a)(1), and the account

will earn a competitive rate of interest that will also be divided pro rata among the participants.

None of the Advisers, the Affiliated Fund, the other Regulated Funds or any affiliated person of the

Affiliated Fund or the Regulated Funds will receive any additional compensation or remuneration of

any kind as a result of or in connection with a Co-Investment Transaction other than (i) in the case

of the Regulated Funds and the Affiliated Fund, the pro rata transaction fees described above and

fees or other compensation described in Condition 2(c)(iii)(B)(z), (ii) brokerage or underwriting

compensation permitted by section 17(e) or 57(k) or (iii) in the case of the Advisers, investment

advisory compensation paid in accordance with investment advisory agreements between the

applicable Regulated Fund(s) or Affiliated Fund(s) and its Adviser.

15. Independence. If the Holders own in the aggregate more than 25 percent of the

Shares of a Regulated Fund, then the Holders will vote such Shares as directed by an independent

31 Applicants are not requesting and the Commission is not providing any relief for transaction fees

received in connection with any Co-Investment Transaction.

30

third party when voting on (1) the election of directors; (2) the removal of one or more directors; or

(3) any other matter under either the Act or applicable State law affecting the Board’s composition,

size or manner of election.

For the Commission, by the Division of Investment Management, under delegated authority.

J. Matthew DeLesDernier

Assistant Secretary